Navigating the Complexities: Determining Ownership of the Family Home in a Texas Divorce

The question of which spouse gets the house in a Texas divorce is one that I frequently encounter from clients and potential clients of the Law Office of Bryan Fagan. My initial reaction is that it depends on whether or not the house is part of the community estate or if it was purchased by either you or your spouse before the time you were married. After all, we would need to look at your family’s specific financial and familial relations to decide on which one of you (if anyone) will wind up with the house in your divorce case.

The decision regarding what to do with the house is a difficult one to make

Between you and your spouse, it is your responsibility to figure out what will happen with the family home. It can be a tough decision to make due to the significance that the home has played in both of your lives. For one, it is likely to be your largest financial asset. Think about it in terms of emotions and finances, and you are sure to see why this is such a big deal situation to work through with your attorney and spouse.

Let’s tackle the emotional aspects of the situation first. Whether you understand it right now or not, you are more attached to home than you may be giving yourself credit for. Think about the moments (good and bad) that you were a part of in that home. Maybe you and your spouse purchased that home right after your wedding. Your children may have been raised there. You may have had a celebration of life for a deceased family member in that home. You may have had most of the fights in your marriage inside the walls of that home. For better or worse, your memories and experiences about your spouse happened inside the home.

For that reason, I think people have understandable concerns about what to do with the house. It is not as easy to part with the house as it would be to part with a car or other significant financial asset. You may be upset and hurt to the point where you cannot concern yourself with anything but the mechanics involved with divorcing your spouse at this moment. However, once your divorce gets underway, and you have the opportunity to asset the situation, I am willing to bet that the emotional component to selling your home will become more important to you.

The other consideration that makes deciding who gets the house so difficult for most people is that it is a substantial financial asset (hopefully) for you and your family. If you are a young person going through a divorce, your most significant financial asset is likely your home. On the other hand, if you are an older person going through a divorce, your home is still a crucial part of your overall net worth, even if your retirement accounts have grown to be substantial.

With that said, nobody reading this blog can take for granted what will happen in your divorce about the family home. If you want to be sure that the next few decades of your life are strong from a financial perspective, you will need to work to ensure that your divorce settles the issue of who gets the house in a way that is advantageous for you. That can mean different things to different people, so I would recommend that you get legal advice from an attorney (like those with the Law Office of Bryan Fagan), in addition to reading blog posts like this one.

Figure out the finances first before making a decision

For today’s blog post, I will assume that your situation is a pretty standard one when it comes to being able to sell the house. You and your spouse have purchased the house during your marriage, thus making it a part of your community estate. Any property or debt part of the community estate is subject to division in the divorce. The house, therefore, is subject to division in the divorce in a few different ways.

However, I will point out that the house could theoretically be a part of your separate estate or the separate estate of your spouse. Typically, this happens if either of you purchased the home before your marriage. If you owned the house before your marriage and your spouse moved in with you after you got married, then the house should be yours, given that a court does not have the authority to divide property in either of your separate estates. However, your spouse may be eligible for a reimbursement claim given that community funds almost undoubtedly went towards paying the mortgage, making improvements, etc.

If the house is part of the community estate, it will behoove you to make sure that you submit accurate information about the finances behind the house to your spouse. It would help if you turned into them the balance on the mortgage as of the initial filing date of your divorce, the mortgage payment per month (how much goes towards principal, taxes, escrow, and interest), and an estimate of the value of your home. All this information can be used to determine whether or not it is in your financial interests to pursue the home in a divorce.

Another factor that you need to consider regarding the importance of accurate financial disclosures involves making sure that you are aware of how much money you earn per month. Many folks don’t have a firm idea of how much they earn monthly and yearly. Without this basic knowledge, you can’t determine whether you can afford to pay a mortgage solely on your income. Remember, you were loaned money based on your and your spouse’s dual income. Whether you can afford to pay a mortgage on one income is anybody’s guess until you determine what your income is.

Finally, it would pay to have someone come in and do an appraisal of your home during the divorce. Even if you have not reached the end stages of your divorce, a realtor can do a reasonably detailed market analysis and determine the value of your property at least roughly. This helps to figure out what sort of equity is in the house and whether or not you are in a “hot” market where you may stand to get a higher than the asking price for the house due to receiving multiple offers.

All in all, you need to be realistic about what you can and cannot afford to do about the house. All other considerations that you can make should take a backseat to the cut-and-dry financial realities. If you can not afford to pay the mortgage on your home, you should not stay in the house. Period. While you may be able to “fake it” for a few months after the divorce ends, if that mortgage represents any more than around 25% of your take-home pay, it is not sustainable for you to pay that mortgage over a long period.

The problem with making decisions when it comes to finances

One pretty significant problem that I see spouses encounter all the time in Texas divorce cases is that one of you will have more knowledge of the household finances than the other. If you are the spouse who does not take as active a role in managing your family’s finances, this is one of those areas that could come back to bite you later on. Figuring out how much debt you have, how much income you earn, and how it all relates to a heated divorce case can be challenging to wrap your arms around.

If you are the type of person who makes quick decisions in life just to put that issue aside and move on from there, I will caution you not to do that in the divorce. This is too important a decision to take for granted. There are no do-overs when it comes to property division in a divorce. Once you and your spouse agree to terms on how to divide up your home, it is final. Exceptions to this rule would be if you or your spouse fraudulently induced the other to agree to a settlement based on incorrect financial numbers.

Is there a step-by-step process to divide the family home in a Texas divorce?

Every divorce case is unique. However, there are specific procedures that you can follow when it comes to determining what to do with the family home. As I alluded to earlier, your first job is to determine whether or not the home is part of your community estate. If it is, I would then recommend determining the home’s value. We have already discussed how you and your spouse can have a real estate agent do market analysis at a minimal cost. If you want to be more in-depth, you can pay a few hundred dollars to have a licensed home appraiser come in and do a thorough analysis of both the housing market for your area as well as of the home itself.

The last question is the big one: how the home will be divided in the divorce. As unique as you and your family are, there are many different options to pursue to answer this question. Most spouses in a divorce will settle their case in mediation rather than in front of a judge. That means that you and your spouse can craft your agreements on the house and any other subject relevant to your case.

For instance, you can agree to have one of you remain in the house after the divorce and for the other party to be paid their equity portion when the remaining spouse refinances the mortgage. Or, if a refinance is not an option, you may be able to get paid your share of the equity by being awarded community property that is equal in value to the equity in the home. Your community estate would need to be substantial enough to facilitate getting paid out of it for giving up your own in the home.

The last thing that I will point out to you is that while divorce in Texas can award your spouse the family home, that does not absolve you of future responsibility under the mortgage. On the contrary, if your name is on the note of the house, it will remain that way after the divorce. The only way to get it off of there is for your spouse to refinance the house and get a completely new loan. While you can require that your spouse applies for a refinance within thirty days of your divorce, there is no way to guarantee that they will be approved. There are ways to cover your backside in situations like this, but I would recommend that your speak to a family law attorney about your options as far as this is concerned.

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